EU Industry Panel to Decide on Carbon Fix Adoption Track

Jan. 27 (Bloomberg) -- The European Parliament’s industry
committee is yet to decide whether to block a faster start of a
carbon-market fix should its objection to the measure be denied
by the environment panel, according to a Parliament official.

The environment committee is scheduled to vote on the
industry panel’s recommendation to reject the emissions-market
rescue plan on Jan. 30. If the recommendation is overturned the
industry panel’s chair will need to consult coordinators from
political groups on whether to object to plans by Matthias
Groote, the head of the environment committee, to shorten the
scrutiny period of the market fix, said the official, who
declined to be identified, citing policy.

The rescue plan for the carbon market, known as
backloading, would help prices rebound from levels that the
commission says are too low to encourage utilities to shift from
coal to less-polluting natural gas and to spur investment in
renewable energy. The cost of emitting one metric ton of carbon-dioxide fell to an all-time low of 2.46 euros ($3.21) last April
amid a record glut of permits.

EU carbon permits for delivery in December rose 2.1 percent
to 5.45 euros a ton on the ICE Futures Europe exchange today.
That’s the highest close since Oct. 16.

Backloading, which would temporarily curb supply of
allowances at auctions, needs to get final clearance from the
Parliament and national governments to be implemented. The
European Commission, the EU’s regulatory arm, asked policy
makers earlier this month to accelerate the scrutiny, which
would normally take until April, to enable the start of the plan
in the first quarter.

Advisory Role

The industry committee, which has an advisory role on the
market fix, voted last week to reject the measure, saying it
undermines the market nature of the EU emissions-trading system.
The environment panel, which leads the parliamentary work on the
proposed carbon-market regulation, will decide on the
recommendation from the industry panel later this week.

A rejection of the industry committee’s recommendation
would mean the panel can’t object to the substance of the
backloading regulation in further stages of the regulatory
process, according to the Parliament official.

A verdict to overrule objections to backloading would pave
the way for Groote to ask the whole Parliament to shorten the
scrutiny period of the market fix from the regular three months.

“It will most likely be for a decision by the second
plenary in February,” Groote told Bloomberg News in an
interview last week. The second session starts on Feb. 24.

Fast Track

In order for such a recommendation to be put on the agenda
of the plenary, Groote’s request for a fast-track evaluation
needs to be approved by the heads of all committees in the
Parliament before it is put on the agenda of the plenary. The
head of the industry panel will decide whether to object after
consulting coordinators from political groups, the Parliament
official said today.

Once announced in plenary, a recommendation to shorten the
scrutiny period is deemed to have been approved if there’s no
opposition within 24 hours, according to the assembly’s rules.
Objections can be raised by a political group or at least 40
members of the Parliament. That would require putting the
recommendation to a vote in which a simple majority in favor is
sufficient for approval.

The commission needs about three weeks after the Parliament
and governments end their scrutiny to formally adopt the
backloading regulation and notify participants in the emissions
market of a new auction calendar.

Should backloading begin in March, the EU would delay the
sales of 400 million carbon permits this year, according to the
draft regulation. If the evaluation is not accelerated and
backloading begins in the second quarter, 300 million allowances
would be delayed at auctions.